INTERNETQ PLC 
By
For Immediate Release 8 April 2014
INTERNETQ PLC
('InternetQ', the 'Group' or the 'Company')
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013
InternetQ, a leading provider of mobile marketing and digital entertainment
solutions for mobile network operators and brands, is pleased to report its
results for the year ended 31 December 2013.
Financial Highlights
* Revenue up by 42% to €104.4 million (2012: €73.4 million) (i)
* EBITDA up by 36% to €14.4 million (2012: €10.6 million) (ii)
* Adjusted EBITDA up by 33% to €16.2 million (2012: €12.2 million)
* Profit after income tax up by 46% to €8.7 million (2012: €6.0 million)
* Adjusted profit after tax up by 44% to €11.1million (2012: €7.8 million)
* Operating profit up by 28% to €9.1 million (2012: €7.1 million)
* Adjusted operating profit up by 32% to €11.8 million (2012: €8.9 million)
* Earnings per share (basic) up by 29% to €0.24 (2012: €0.18)
* Adjusted earnings per share (basic) up by 27% to €0.30 (2012: €0.24)
* Cash and cash equivalents as at 31 December 2013 of €13.2 million
(2012: €9.3 million) including restricted cash of €0.5 million (2012: €0.6 million)
* Strong start to 2014 with trading in line with management expectations
Operational Highlights
* Strong traction with mobile operators and brands drives customer growth
+ Customer reach now includes over 165 corporate clients
+ Actively engaged with over 150 mobile Network operators having
delivered 37 mobile marketing campaigns during the year through
MobiDialog platform
+ New strategic relationships with key clients is expected to generate
further revenues and expand the Group's end user base in 2014
* Akazoo music service continues to gain significant market presence
+ The Group's B2C segment grew by 40%, driven by a strong performance of
the Akazoo music streaming platform
+ Akazoo's growth is expected to accelerate in 2014 driven by planned
territory roll-outs and device manufacturer partnerships
* Minimob successfully surpassed 100 million unique installations in 12
months
+ Advanced product features for developers and publishers expected to be
a key driver into the US40 billion -dollar App economy
+ Monetary advantage through the use of the Minimob platform for B2B and
B2C end markets
* Increased geographic diversity enables the Group to access high growth
mobile markets
+ Increased focus in MEA, now 29% (2012: 22%) of revenues and maintained
focus on Asia, now 26% (2012: 33%) of the Group revenues
+ Expanding into new regions with Latin America 9% of Group revenues
* Acquisition strategy and ongoing investment underpins the Group's market
leading position
+ Atlas acquisition has strengthened InternetQ's revenue growth in Europe
and enhanced mobile payment capabilities
+ Ongoing synergies post Interacel transaction coupled with the Group's
mobile marketing expertise has created a strong new business pipeline
in the Americas
+ Ongoing investment in both employees and technology
Panagiotis Dimitropoulos, Founder and Chief Executive Officer of InternetQ
commented:
"We are delighted to report another set of excellent results, highlighting the
continued strategic progress made across the business. This strong performance
reinforces our belief that both innovation and product development foster close
customer relationships which underpin long term success.
"We continue to maintain our leading position in Mobile Marketing and the rapid
roll-out of Akazoo both direct to consumers and more recently to operators and
device manufacturers is now creating a powerful and much sought after asset.
The ongoing adoption of Minimob, another example of our commitment to
innovation, continues at an unwavering pace, with over 100 million unique
installations.
InternetQ is now ideally placed to capitalise on a number of high-growth market
opportunities and we look forward to continuing to create value for our
shareholders."
i. Acquisitions completed during the year contributed €19.3 million and €1.5
million of revenue and profit after income tax respectively,
post-acquisition.
ii. Adjusted numbers are presented in note 2. These are applied consistently
throughout the announcement.
For further details:
InternetQ Tel: +44 (0) 20 3519 5250 / +30 (211) 101 1101
Panagiotis Dimitropoulos, Founder and CEO Tel: +30 (697) 811 7520
Veronica Nocetti, Chief Financial Officer Tel: +30 (694) 420 5275
Buchanan
Jeremy Garcia / Gabriella Clinkard Tel: +44 (0)20 7466 5000
RBC Capital Markets
Stephen Foss / Pierre Schreuder Tel: +44 (0)20 7653 4000
Canaccord Genuity
Simon Bridges / Cameron Duncan Tel: +44 (0)20 7523 8000
About InternetQ plc:
InternetQ is a leading digital content and mobile marketing services company
with operations spanning Asia, Europe, Africa and the Americas. It offers
proprietary technology platforms to help mobile network operators, brands, and
media companies to conduct targeted, interactive and measurable marketing
initiatives on mobile devices. Its mobile value added services include Akazoo,
which allows consumers to purchase digital music content, MobiDialog, its
platform for mobile operators to manage marketing campaigns with predictive
analytics, and Minimob, a platform providing developers with the most advanced
tools to cross-promote and monetize their apps. All underpinning the rapid
global growth in smart devices and the thriving app economy.
InternetQ is a publicly traded company listed on the AIM market of the London
Stock Exchange, under the symbol INTQ.
For investor related queries, please email: ir@internetq.com
Chairman's Statement
It is a pleasure and a privilege to have joined InternetQ at such an exciting
point in the Company's development. As Panagiotis Dimitropoulos explains in his
Chief Executive's Statement, this has been an excellent year of progress and
one that positions the Group extremely well for continued future growth.
I would like to extend my heartfelt thanks to the outgoing Chairman
Konstantinos Korletis.
I was pleased that soon after joining the board we were able to further
strengthen it, with the appointment of Harris Jones as Non-Executive Director.
Harris brings 14 years of experience in the mobile sector to InternetQ, having
previously been CEO, amongst others, of Cable and Wireless International.
I have been immensely impressed by the strength of InternetQ's executive team,
their sense of common purpose, their disciplined approach (in particular around
acquisitions), the abundance of technical innovation and the backing that they
receive from their ever increasing global client base. The Group's consistently
strong track record of growth since its IPO in 2010 is a testament to the
commitment and tireless work of this team and the dedicated and talented staff
across the world.
I am delighted to report that InternetQ has maintained its strong performance
over the last 12 months, continuing its excellent track record of underlying
revenue growth across all its business divisions. Achieving, for the fourth
consecutive year, record levels of revenue, EBITDA and earnings per share
momentum.
Including the results from acquisitions completed during the year, revenue
increased by 42% to €104.4 million. Margins improved in the second half of the
year, driving annual adjusted EBITDA to €16.2 million and after-tax adjusted
profitability of €11.1 million in the full year. Adjusted earnings per share
(Note 2) increased by 27% to €0.30.
Significant structural growth potential in our core markets of mobile marketing
and entertainment
InternetQ operates in a fast growing but rapidly evolving global marketplace.
Smartphone penetration is driving mobile internet penetration and is expected
to overtake fixed broadband as soon as 2017. Mobile penetration in emerging
markets is now tracking above Broadband and, in some regions; mobile is seen as
a default option for internet access and often the standard method for
electronic payments. Conversely, mobile advertising spend is currently very
small relative to the time consumers spend on their devices, which continues to
increase. This market dynamic underpins expectations of a significant upward
shift in mobile advertising spend globally. This powerful and dynamic market
backdrop continues to endorse InternetQ's strategy to offer a compelling suite
of entertainment products, marketing solutions and advertising to this growing
mass market of smartphone users.
Furthermore, InternetQ is a clear market leader in the field of mobile
marketing. Headquartered in Athens, but with a diversified international
footprint, the business was founded by our CEO Panagiotis Dimitropoulos in
2000, as a mobile services company. With over 13 years' experience in the
sector we have developed over time deep and long lasting relationships with
network operators and handset providers across the world.
InternetQ is therefore ideally placed to profit from these trends. We have
developed a broad emerging markets footprint, strong mobile marketing
capabilities, exponential growth in the Minimob software installed base (100m
downloads thus far) and a leading Music streaming/download business in Akazoo.
We have developed a three pronged approach, driving up revenues from the mobile
market. We continue to invest in our original MobiDialog marketing platform
(which continues to deliver double-digit growth), have developed in-house our
own sophisticated Minimob platform which is embedded into Smartphone apps,
while growing our Akazoo music streaming subscribers' base across our
international footprint through partnerships with Mobile networks operators.
A diverse geographic footprint
At the time of the IPO of InternetQ in 2010, the business was concentrated
around three core markets; Poland, Turkey and Greece. Since then, we have
developed a diverse geographic footprint. With Europe accounting for 36% of
2013 revenues, Asia 26%, Middle East and Africa 29% and Latin America 9%. The
Company is now well placed to leverage these global relationships by offering a
broad range of products and services.
Successful integration of acquisitions and a disciplined approach to their
evaluation
As I have already said, the executive team has demonstrated to the board that
they are disciplined when it comes to evaluating the large number of
acquisition opportunities available. Each opportunity must align to InternetQ's
stated strategy of broadening its geographical reach whilst further developing
its service offering. InternetQ's key assessment criteria for any transaction
include:
* Immediate "plug-and-play" access to a significant number of high growth
International markets.
* Ability to leverage "untapped" capacity of existing direct connectivity
agreements with Mobile Operators.
* Immediate capability to deploy and widely promote existing products and
services and more effectively cross sell assets across a wider market
footprint.
* Significant opportunity to take advantage of the imminent transformation to
a smartphone culture via the Minimob smart advertising platform.
* Utilise the strength of the management team and ongoing media relationships
to effectively exploit the vast regional potential arising from the
dramatic adoption of the mobile internet.
I am pleased to report that Atlas Interactive, which was acquired in July 2013,
continues to trade well following its successful and swift integration. The
executive team remains confident that the combination of its expansive European
footprint and connectivity agreements with Mobile Network Operators worldwide
will create significant cross selling opportunities. Indeed a number of new and
existing customers have already increased their spending as a result of the
acquisition.
Improving cash position and strengthening balance sheet
I am also pleased to report that cash flow has improved with operating cash
flow of €13.2 million (2012: €1.9 million) or 92% (18%)of EBITDA so we end the
year with a stronger balance sheet and cash and cash equivalents at year-end of
€13.2 million (2012: €9.3 million) including restricted cash of €0.5 million
(2012: €0.6 million). This solid financial position provides sufficient
capacity to support future growth, especially as smartphone adoption and usage
becomes commonplace across multiple emerging and developed markets.
Prospects for the business
This set of results is further evidence of InternetQ's progress in our chosen
markets. With the ever increasing growth in smartphone penetration set to
continue, the coming years hold great opportunity for InternetQ. We will
remain flexible and evolve our businesses to take full advantage of these
market trends.
Chief Executive Officer's Review
As CEO, I am delighted to report another tremendous year of development and
growth driven by product and geographic expansion, which now includes 23
countries, as well as our continued global sales momentum.
As such, we believe that this year's results are highly positive and capture
the energy of our industry and further outlines the significant opportunity
that mobile consumerism will create for InternetQ in the coming years.
Strong sales growth, greater market access
Our audited figures, which include revenue growth of 42% and profit growth of
46% for the year, are once again impressive. This strong growth demonstrates
the potential of InternetQ's proposition as the Group's platforms find new end
markets, gather greater commercial momentum and leverage the ability to scale,
beyond the more traditional Telco business, as services are propagated into
multiple new distribution channels.
Setting a firm foundation for global expansion
From a corporate perspective, our targeted M&A activity has certainly given us
greater scope and capability to drive profitable business across all the areas
outlined in last year's report. In particular, 2013 saw InternetQ acquire and
successfully integrate the German billing and messaging aggregation leader,
Atlas Interactive, and Interacel Holdings in Latin America cementing a dominant
position in central Europe and the Americas.
Making Music and Apps work harmoniously
There have been great strides made in the Music industry in recent years and
the provision of streaming music platforms has become a highly fertile area for
the business; for its part, our Akazoo platform has grown some 80% year-on-year
with even more deals in the immediate pipeline.
Investment in our product extensibility has reaped dividends too, with the
Minimob platform becoming a major proposition for developers and publishers
alike. We believe this line of business, namely in-app and deep linked mobile
marketing and advertising will become a fundamental driver; into the burgeoning
USD40 billion-dollar App economy.
The interconnected future
In my opinion, there is no company better positioned to take advantage of this
wholesale shift to smart devices, always-on Internet and the desire for
consumers everywhere to transact instantly. Our business has never been
stronger and our end markets have the potential to drive significant growth
over the coming years.
Chief Financial Officer's Review
Review of the Group's business
The Group's financial results for the year are once again the Company's best
ever in terms of revenues and profits, allowing us to look to 2014 with
optimism. The market environment is very positive, with ever increasing numbers
of Smartphones and an increasing breadth of functions and services provided
through such devices. InternetQ has continued to extend geographically and also
to develop new value added services which will maintain our momentum in years
to come.
The Company's performance, and ability to drive profitable growth during the
past year is not only a result of the healthy market, the strength of our
market proposition and operational execution, but can also be attributed to our
approach to managing costs, cash flow and our balance sheet.
In addition, 2013 was marked by the completion of two important acquisitions,
Atlas Interactive in Germany and Interacel in Latin America. As such, by the
end of 2013 the Group held a strong position, having achieved the objectives of
globalizing its operations, improving its competitiveness and creating a
balanced portfolio of products, setting a strong foundation for future growth.
Group revenues generated 42% growth in 2013, with both segments delivering
substantial sales growth. Revenues from B2B activities grew by 43% to € 87.7
million (2012: €61.5 million) while revenues from B2C grew by 40% to € 16.7
million (2012: €11.9 million).
Selling and administration costs increased by 49%, primarily due to the
acquisitions and the geographic expansion of the business. Adjusted EBITDA
(after adjustment for share incentive plans and share based payments amounting
to €1,412,997) (Note 9) grew by 33% to €16.2 million (2012: €12.3 million) a
margin of 16% (2012: 17%). The profit after tax for the year reached €8.7
million compared to €6 million for 2012.
Investment in the Akazoo and Minimob platforms resulted in an increase in
capital expenditure. Total capital expenditure including fixed and intangibles
assets for the year ended 31 December 2013 stood at €14.4 million, an increase
of 82% from the previous year (2012: €7.9 million).
The Group ended 2013 with €4.7 million (2012: €2.2 million) net cash, which
consisted of €13.2 million (2012: €9.3 million) cash and cash equivalents and
restricted cash and €8.5 million of bank debt (2012: €7.1 million). The Group
raised €11.1 million of capital in July 2013 in order to finance the
acquisition of Atlas Interactive in Germany and the expansion of its business
internationally. The terms and conditions of the Group's borrowing agreements
continue to be relatively favorable. Our €4 million term loan matures in March
2022 and another €2 million loan arrangement matures in April 2017. InternetQ
Germany also obtained a €2 million overdraft facility for the financing of its
expanding business with gaming companies, from which, the utilized portion as
of year-end was €1.1 million.
Summary
InternetQ is entering 2014 in a stronger financial position than at the start
of the previous year. We have delivered strong financial results with a
continued dedication to cost control, selective investments, and improved cash
conversion.
All in all, we have completed a year of considered corporate recalibration to
position the Group more strongly from an operational, as well as, from a
financial standpoint providing a base to capitalize on in the future.
For all of us in the Group's Management, our foremost concern is to take
careful and measured steps to offset risks and to safeguard the interests of
the Group, of our people, of our shareholders and of our partners. In other
words, of all those who put their trust in us and who assist us in our efforts.
Income Statements
For the years ended 31 December 2013 and 2012
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
Notes 2013 2012
Revenues 3 104,417,905 73,417,104
Cost of sales (48,980,504) (35,183,726)
Gross profit 55,437,401 38,233,378
Other operating income 415,987 188,673
Selling and distribution costs (42,571,855) (26,511,544)
Administrative expenses (4,144,801) (4,783,467)
Operating profit 9,136,732 7,127,040
Finance costs (735,540) (586,818)
Finance income 609,262 361,065
Profit before tax 9,010,454 6,901,287
Income tax 4 (269,869) (899,587)
Profit after income tax 8,740,585 6,001,700
Attributable to:
Ownersof the parent 8,740,585 6,001,700
Earnings per share basic 5 0.24 0.18
Earnings per share diluted 5 0.23 0.18
Adjusted Results: 2 2,404,765 1,764,311
Adjusted profit after income tax 2 11,145,350 7,766,011
Adjusted earnings per share basic 2 0.30 0.21
Adjusted earnings per share diluted 2 0.30 0.21
Statements of comprehensive income
For the years ended 31 December 2013 and 2012
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
2013 2012
Profit for the year 8,740,585 6,001,700
Other comprehensive income
Exchange differences on translation of foreign (665,655) 511,432
operations
Other comprehensive (loss)/income for the year (665,655) 511,432
Total comprehensive income for the year 8,074,930 6,513,132
Attributable to:
Equity holders of the parent 8,074,930 6,513,132
Statements of financial position
As at 31 December 2013 and 2012
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
2013 2012
Assets
Non-current assets
Property, plant and equipment 2,190,605 2,185,663
Investment properties 470,000 505,700
Goodwill 15,086,546 3,097,051
Intangible assets 6 39,797,278 11,292,011
Non-current financial assets 2,813,690 2,602,605
Other non-current assets 926,248 102,607
Deferred tax assets 895,927 452,121
Total non-current assets 62,180,294 20,237,758
Current assets
Trade receivables 26,917,507 30,406,390
Prepayments and other receivables 9,465,579 2,889,232
Current financial assets 108,513 102,519
Cash and cash equivalents 7 12,695,021 8,697,402
Restricted cash 7 522,876 633,538
Total current assets 49,709,496 42,729,081
Total assets 111,889,790 62,966,839
Equity and liabilities
Equity attributable to equity holders
of the parent company
Share capital 117,553 105,345
Share premium 47,500,518 34,227,669
Other components of equity 14,558,856 1,199,047
Other capital reserves 154,712 -
Exchange differences (34,743) 647,671
Retained Earnings 19,629,955 10,889,370
Total equity 81,926,851 47,069,102
Non-current liabilities
Interest-bearing loans and borrowings 8 5,106,700 240,100
Employee benefits liability 43,585 42,500
Provisions 156,145 51,830
Other non-current liabilities 9,167 -
Deferred tax liability 5,025,409 173,467
Total non-current liabilities 10,341,006 507,897
Current liabilities
Trade payables 11,435,963 10,807,890
Interest-bearing loans and borrowings 8 2,531,726 1,380,509
Current portion of interest-bearing 8 833,300 601,800
loans and borrowings
Income tax payable 863,646 673,677
Accruals and other current liabilities 3,957,298 1,925,964
Total current liabilities 19,621,933 15,389,840
Total liabilities 29,962,939 15,897,737
Total equity and liabilities 111,889,790 62,966,839
Statements of changes in equity
For the years ended 31 December 2013 and 2012
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group Share Share Other Other Exchange Retained Total
capital premium components capital differences Earnings
of equity reserves
Balance at 94,884 25,376,214 936,057 - 136,239 4,898,707 31,442,101
1 January 2012
Profit after - - - - - 6,001,700 6,001,700
income tax
Other - - - - 511,432 - 511,432
comprehensive
income
Total - - - - 511,432 6,001,700 6,513,132
comprehensive
income
Provision for - - - - - (11,037) (11,037)
employee
benefit
liabilities
Total - - - - 511,432 5,990,663 6,502,095
comprehensive
income after
pension
related
liabilities
Share capital 10,461 8,522,109 - - - - 8,532,570
increase
Transaction - (379,835) - - - - (379,835)
costs
Share - - 232,781 - - - 232,781
incentive
plan
Contingent - 709,181 (522,445) - - - 186,736
consideration
Share based - - 552,654 - - - 552,654
payments
Balance at 105,345 34,227,669 1,199,047 - 647,671 10,889,370 47,069,102
31 December 2012
Profit after - - - - - 8,740,585 8,740,585
income tax
Other - - - - (682,414) - (682,414)
comprehensive
income/(loss)
Total - - - - (682,414) 8,740,585 8,058,171
comprehensive
income /
(loss)
Share capital 12,208 13,787,778 - - - - 13,799,986
increase
Transaction - (514,929) - - - - (514,929)
costs
Employees - - 771,681 - - - 771,681
Share
incentive
plan
Non-Executive - - 11,050 - - - 11,050
directors
share based
payments
Contingent - - 12,577,078 154,712 - - 12,731,790
consideration
Balance at 117,553 47,500,518 14,558,856 154,712 (34,743) 19,629,955 81,926,851
31 December 2013
Statements of cash flows
For the years ended 31 December 2013 and 2012
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
2013 2012
Cash flows from operating activities
Profitbefore income tax 9,010,454 6,901,287
Adjustments for:
Depreciation and amortisation 5,273,261 3,449,939
Valuation of investment property 35,700 29,300
Increase / (decrease) in provisions 104,315 (14,300)
Provision for employee benefits 12,285 85,592
liability
Allowance for doubtful trade and other 98,942 122,438
receivables
Amortisation of investment grants (35,830) -
Employees Share incentive plan expense 1,179,080 487,917
Non-Executive Directors share based 233,917 269,598
payments
Business combinations share based - 895,518
payments
Losses on disposal of property, plant, and equipment (4,931) 10,076
Finance income (162,243) (181,896)
Finance costs 469,354 390,394
Net cash before working capital changes 16,214,304 12,445,863
(Increase)/ decrease in:
Trade receivables 10,767,905 (18,023,830)
Prepayments and other receivables (5,580,079) 10,449,686
Restricted cash 110,662 292,599
Increase/ (decrease) in:
Trade payables (8,935,874) 2,853,344
Accruals and other current liabilities 827,406 (5,629,414)
Other non-current liabilities 1,714 -
Income taxes paid (150,846) (387,521)
Employee benefits liabilities paid (11,200) (81,797)
Net cash from operating activities 13,243,992 1,918,930
Cash flows from investing activities
Capital expenditure for property, plant and (370,491) (723,966)
equipment
Proceeds from disposals of property, plant and 10,674 43,591
equipment
Capital expenditure for intangible (13,588,761) (6,936,563)
assets
Acquisition of subsidiaries (net of (10,721,396) -
cash acquired)
Proceeds from investment grants 43,283 -
Interest and related income received 46,811 106,500
Net cash (used in) / from Investing (24,579,880) (7,510,438)
Activities
Cash flows from financing activities
Proceeds from the issuance of share 11,105,965 7,281,368
capital
Purchase of financial assets (86,754) (2,639,886)
Proceeds from long term borrowings: 5,940,000 -
Payments of long term borrowings (841,900) (143,468)
Proceeds from short term borrowings 1,150,000 -
Payment of short term borrowings - (723)
Other non-current assets (809,104) (13,074)
Finance costs paid (459,045) (364,035)
Net Cash used in Financing Activities 15,999,162 4,120,182
Effect of exchange rates' changes on flows and cash (665,655) 511,432
Net increase/(decrease) in cash and cash equivalents 3,997,619 (959,894)
Cash and cash equivalents at beginning 8,697,402 9,657,296
of year
Cash and cash equivalents at end of the 7 12,695,021 8,697,402
year
1. Business combinations
a. InternetQ Germany (prior Atlas Germany GmbH) acquisition:
On 11 July 2013, the Group completed the acquisition of 100% of the voting
rights of Atlas Germany GmbH (renamed to InternetQ Germany GmbH), a Germany
based mobile and media services company. InternetQ Germany is a leader in
access, billing and digital content distribution in more than 120 countries,
connecting with more than 300 Mobile Network Operators ('MNOs') worldwide and
operating a database of over 3 million opt-in users for mobile marketing
campaigns.
The acquisition of InternetQ Germany is in line with InternetQ's stated
strategy of broadening its geographical reach whilst further developing its
service offering.
Assets acquired and liabilities assumed
The fair value of the assets and liabilities acquired amounted to €16.9 million
and €10.2 million, respectively.
The goodwill amounted to €8.9 million and mainly represents the benefits that
the Group is expecting from the increased Mobile Marketing activity with MNOs,
where Atlas has direct commercial agreements, as well as from the roll out of
Akazoo in the area of Western Europe and Central & Eastern Europe.
Since the date of acquisition and until 31 December 2013, InternetQ Germany has
contributed €18,610,162 of revenue and €1,463,445 profit after tax to the
Group. If the acquisition had taken place at the beginning of 2013 year and not
on 11 July 2013, the revenue contribution to the Group would have been €
31,785,951 and the negative contribution to the profit before tax of the Group
would have been €1,270,787.
b. Interacel Holdings LLC acquisition:
On 14 November 2013, the Group completed the acquisition of 100% of the voting
rights of Interacel Holdings. Interacel was founded in 2011 and operates
directly or through subsidiaries in Argentina, Chile, Ecuador, Paraguay, Peru,
Costa Rica, Dominican Republic, Guatemala, Honduras and Nicaragua. Interacel is
active in some of the world's fastest growing mobile markets and has direct
connectivity agreements with mobile network operators in 11 countries across
the Americas. Interacel also holds strategic partnerships with national media
companies and radio stations across Latin America.
This acquisition will accelerate InternetQ's growth across Latin America,
providing an established platform from which to upsell the Company's mobile
marketing, Akazoo music streaming and Minimob smart advertising services
directly to mobile network operators and media brands.
Assets acquired and liabilities assumed
The fair value of the assets and liabilities acquired amounted to €11.7 million
and €5.1 million respectively.
The goodwill amounted to €3,097,212 mainly represents the benefits that the
Group is expecting from the increase Mobile Marketing activity with MNOs where
Interacel has direct commercial agreements as well as from the roll out of
Akazoo in the area of Latin America.
Since the date of acquisition and until 31 December 2013, Interacel has
contributed €707,710 of revenue and the negative contribution to the profit
after tax of the Group is amounted €56,151. If the acquisition had taken place
at the beginning of 2013 year and not on 14 November 2013, the revenue
contribution to the Group would have been €10,426,429 and the negative
contribution to the profit after tax of the Group would have been €556,773.
2. EBITDA and Adjusted Results
The tables below present a reconciliation from profit after income tax to EBITDA.
Group
2013 2012
Profit after income tax 8,740,585 6,001,700
Income tax 269,869 899,587
Finance costs 735,540 586,818
Finance Income (609,262) (361,065)
Depreciation and amortization 5,273,261 3,449,939
EBITDA 14,409,993 10,576,979
Adjusted for:
Share based compensation 1,412,997 757,516
One-off acquisition costs 398,087 895,518
Adjusted EBITDA 16,221,077 12,230,013
Adjusted results, which are non-GAAP financial measures, are presented in order
to improve investors understanding of financial results and improve
comparability of financial information from period to period.
Reconciliation of the adjusted results
2013
Income Adjustments Adjusted
Statement Resutls
EBITDA 14,409,993 1,811,084 16,221,077
Operating Profit 9,136,732 2,649,436 11,786,168
Profit after tax 8,740,585 2,404,766 11,145,351
2012
Income Adjustments Adjusted
Statement Resutls
EBITDA 10,576,979 1,653,034 12,230,013
Operating Profit 7,127,040 1,787,614 8,914,654
Profit after tax 6,001,700 1,764,311 7,766,011
Adjustments:
2013 2012
Employees Share Incentive Plans 1.179.080 487.918
Non-Executive directors share based payments 233.917 269.598
Acquisition costs and share based payments from 398.087 895.518
business combinations
1.811.084 1.653.034
Amortisation of assets identified through 838.352 134.580
Business combinations
2.649.436 1.787.614
Deferred tax charges on amortisation of assets (244.670) (23.303)
identified through business combinations
Total 2.404.766 1.764.311
Reconciliation of the adjusted earnings per share basic
Group
2013 2012
Adjusted Profit after tax 11,145,350 7,766,011
Weighted average number of ordinary shares for basic 36,973,217 32,648,605
earnings per share
Earnings per share basic Adjusted 0.30 0.24
3. Segment Information
For management purposes the Group is separated into business units based on its
customer types. Consequently, the Group has two reportable operating segments
as follows:
* Business to Business (B2B) segment: B2B revenues are those that arise from
the marketing of InternetQ's products to other organizations. It allows the
Group to sell its products or services to other companies or organizations
that resell them, use them in their products or services or use them to
support their operations.
* Business to Consumer (B2C) segment: B2C revenues are those resulting from
marketing of InternetQ's products directly to consumers as the Group's
target market.
In the past two years the Group has driven the scale of the business to the
next level with a further push into new territories by acquiring Atlas Germany
and Interacel Holdings, providing commercial synergies based on increased
breadth of distribution.
Following this, the Group has changed its segments to align with the strategy,
allow management to take quick decisions and point to the opportunities and
accommodates and anticipates changes in the business and in customers'
behaviors. From the marketing perspective, segments should ultimately fit the
organisation's ability to identify and respond to customers. This presentation
is therefore consistent with how the business operates and how performance is
assessed.
As such InternetQ's management has decided to report two clearly defined
categories that better reflect the Group's customer types, namely B2B and B2C.
The following table represents revenue and profit information regarding the
Group's operating segments for the year ended 31 December 2013.
2013 Adjustments
and
B2B B2C eliminations Consolidated
Revenue
External customer 87,739,600 16,678,305 - 104,417,905
Inter-segment 3,221,792 3,517,298 (6,739,090) -
Total revenue 90,961,392 20,195,603 (6,739,090) 104,417,905
Segment operating profit /(loss) 10,050,708 (515,889) 9,534,819
Segment operating profit / (loss)
includes the following:
Depreciation and amortisation (3,239,270) (2,033,991) - (5,273,261)
Operating Assets 81,377,570 26,224,090 - 107,601,660
Operating Liabilities 10,302,804 5,299,354 - 15,602,158
Other disclosures
Capital expenditure 11,955,306 2,396,620 - 14,351,926
Revenues from three clients (partners with which the Group conducts campaigns
in the regions of Middle East, Africa and Russia) which amounted to €67,638,770
(77% of total B2B revenues) are included within the B2B segment, revenues from
one client which amounted to €5,299,447 (32% of total B2C revenues) are
included within the B2C segment.
The following table presents revenue and profit information regarding the
Group's operating segments for the year ended 31 December 2012.
2012 Adjustments
and
B2B B2C eliminations Consolidated
Revenue
External customers 61,523,198 11,893,906 - 73,417,104
Inter-segment 4,467,941 3,268,290 (7,736,231) -
Total revenue 65,991,139 15,162,196 (7,736,231) 73,417,104
Segment Operating profit /(loss) 9,068,617 (1,046,059) - 8,022,558
Segment profit / (loss) includes
the following:
Depreciation and amortisation (1,938,393) (1,511,546) - (3,449,939)
Operating Assets 46,797,435 12,506,459 - 59,303,894
Operating Liabilities 11,415,623 1,412,561 - 12,828,184
Other disclosures
Capital expenditure 6,393,472 1,502,453 - 7,895,925
Revenues from three clients (partners with which the Group conducts campaigns
in the regions of Middle East, Africa and Russia) which amounted to €49,331,188
(80% of total B2B revenues) are included within the B2B segment, revenues from
five clients which amounted to €6,518,499 (55% of total B2C revenues) are
included within the B2C segment.
Acquisition costs, finance income, finance costs and income taxes are not
allocated to individual segments as the underlying instruments are managed on
an overall Group basis.
Investment property, non-current and current financial assets, deferred tax
asset and liabilities, income taxes payable and loans and borrowings are not
allocated to segments as they are also managed on an overall Group basis.
Geographic information
The Company being only the holding company of the Group has no operations in
the country of domicile.
Revenues from external customers 2013 2012
Europe 37,297,300 33,452,234
Latin America 9,070,945 22,552
Middle East and Africa 30,726,774 15,951,913
Asia 27,322,886 23,990,405
Total Revenues 104,417,905 73,417,104
Revenues in Europe mainly includes revenue in Russia, Poland, Greece and
Germany corresponding to 19% (2012:21%), 7% (2012: 9%), 4% (2012:4%) and 2%
(2012:0%) of the Groups revenues.
4. Income tax
The amounts of income taxes which are reflected in the accompanying income
statements are analysed as follows:
Group
2013 2012
Current income taxes 289,954 407,978
Deferred tax (20,085) 491,609
Total charge for income taxes 269,869 899,587
The reconciliation of income taxes reflected in the income statements and the
amount of income taxes determined by the application of the Company's statutory
tax rate to pretax income is summarized as follows:
Group
2013 2012
Profit before income taxes 9,010,454 6,901,287
Income tax calculated at the nominal applicable rate 2,072,404 1,690,815
(23%) (2012: 24.5 %)
Effect of income/(loss) subject to (572,476) (969,769)
different tax rates
Tax effect on non-tax deductible expenses and non-tax (476,740) (123,506)
deductible income
Tax effect on-tax losses for which no 57,846 342,562
deferred tax was recognised
Capital allowances for tax incentive (811,165) (40,515)
plans
Total charge for income taxes 269,869 899,587
5. Earnings per share
Basic earnings/(loss) per share amounts are calculated by dividing net profit/
(loss) for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Group
2013 2012
Net profit attributable to ordinary equity holders of 8,740,585 6,001,700
the parent from continuous operations
Weighted average number of ordinary shares for basic 36,973,217 32,648,605
earnings per share
Earnings per share basic 0.24 0.18
Weighted average number of ordinary shares for basic 36,973,217 32,648,605
earnings per share
Effect on dilution:
Deferred consideration shares 138,456 62,826
Acquisition costs / share based payments - 50,556
Share incentive plan 352,311 290,889
490,767 404,271
Weighted average number of ordinary shares adjusted for 37,463,984 33,052,876
the effect of dilution
Earnings per share diluted 0.23 0.18
6. Intangible assets
Intangible assets in the accompanying financial statements of the Group are
analysed as follows:
Purchased Internally Software Customers Non Total
Software generated under relationships compete
software Development agreement
Cost
At 1 January 5,028,942 5,705,884 1,505,582 595,083 203,186 13,038,677
2012
Additions 5,234,892 1,253,511 497,484 - - 6,985,887
Additions - - - - - -
from
Acquisitions
Transfers 1,140,143 365,439 (1,505,582) - -
Sales/ write - - - - - -
offs
At 31 11,403,977 7,324,834 497,484 595,083 203,186 20,024,564
December
2012
Additions 6,621,495 649,622 6,509,145 - - 13,780,262
Additions 1,588,104 7,618,242 - 8,485,704 1,627,357 19,319,407
from
Acquisitions
*
Transfers 396,121 101,363 (497,484) - - -
Sales/ write - (791,430) - - - (791,430)
offs
At 31 20,009,697 14,902,631 6,509,145 9,080,787 1,830,543 52,332,803
December
2013
Amortisation
At 1 January (2,975,782) (3,025,461) - (19,836) - (6,021,079)
2012
Additions (1,550,101) (1,055,684) - (39,672) (66,017) (2,711,474)
Sales/ write - - - - - -
offs
At 31 (4,525,883) (4,081,145) - (59,508) (66,017) (8,732,553)
December
2012
Additions (2,849,154) (1,436,272) - (236,362) (72,614) (4,594,402)
Sales / - 791,430 - - - 791,430
write offs
At 31 (7,375,037) (4,725,987) - (295,870) (138,631) (12,535,525)
December
2013
Net book 2,053,160 2,680,423 1,505,582 575,247 203,186 7,017,598
value at 1
January 2012
Net book 6,878,094 3,243,689 497,484 535,575 137,169 11,292,011
value at 31
December
2012
Net book 12,634,660 10,176,644 6,509,145 8,784,917 1,691,912 39,797,278
value at 31
December
2013
* These additions relate to the acquisition of InternetQ Germany GmbH and
Interacel Holdings, for further details please refer to note 7. The accumulated
depreciation of these assets was eliminated against the gross carrying amount
of the assets.
7. Cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash in the accompanying financial
statements are analysed as follows:
Group
2013 2012
Cash in hand 12,752 84,614
Cash at banks 12,682,269 8,612,788
Total cash and cash equivalents 12,695,021 8,697,402
Restricted cash 522,876 633,538
Total cash and cash equivalents and 13,217,897 9,330,940
restricted cash
Cash at banks earns interest at floating rates based on monthly bank deposit
rates. Interest earned on cash at banks and time deposits is accounted for on
an accrual basis and for the year ended 31 December 2013 amounted to €34.165
(2012: €73,623) for the Group.
Restricted cash represents funds deposited as collateral, for the issuance of
bank guarantees arising in the ordinary course of the business. The Group
maintains several bank facilities amounting to €5 million for the issuance of
letter of guarantees.
8. Interest Bearing Loans and Borrowings
a) Long-term loans:
Long-term loans in the accompanying financial statements are analysed as follows:
Group
2013 2012
Bond loans - 841,900
Other loans 5,940,000 -
Total 5,940,000 841,900
Less: current portion
- bond loans - (601,800)
- other loans (833,300) -
Total current portion (833,300) (601,800)
Long term portion 5,106,700 240,100
The Group has entered into two Bond Loan agreements as follows:
* In March 2007 the Group entered into a Bond Loan agreement for a principal
amount of €800,000 which bears interest at the six-month Euribor plus a
margin of 2.3%. The repayment of the Bond is in 12 semi-annual
installments. The loan was fully repaid within 2013.
* In March 2008 the Group entered into a Bond Loan agreement for a principal
amount of €500,000 which bears interest at the six-month Euribor plus a
margin of 2.0%. The loan was fully repaid within 2013.
Moreover the Group has entered into two new loans within 2013 as follows:
* In May 2013 the Group entered into a Loan agreement for a principal amount
of €2,000,000 which bears interest at 6.25%. The repayment of the loan is
in 6 semi-annual installments. The first installment will be paid in
November 2014 while the last installment will be paid in May 2017.
* In December 2013 the Group entered into a Loan agreement for a principal
amount of €4,000,000 (€3.940.000 have been utilised within the year 2013)
which bears interest at three-months Euribor plus a margin of 5.5%. The
repayment of the loan is in thirty two quarterly instalments. The first
instalment will be paid in March 2014 while the last instalment will be
paid in March 2022.
The total interest expense for long-term borrowings for the year ended 31
December 2013 amounted to €131,557 (2012: €47,270) for the Group and is
included in the financial expenses.
b) Short-term borrowings:
The Group has short-term borrowings (overdraft facilities) with annual variable
interest rates which vary from 5% to 8%.
The table below presents the available credit lines of the Company together
with the utilized portion.
Group
2013 2012
Credit lines available 7,350,000 5,350,000
Unused portion (4,818,274) (3,969,491)
Used Portion 2,531,726 1,380,509
The total interest expense for short-term borrowings for the year ended 31
December 2013, amounted to €87,340 (2012: €116,708) and is included in
financial expenses.
9. Other Information
The summary financial information for the year ended 31 December 2013 set out
above is not the Company's Statutory Accounts. This financial information for
the year ended 31 December 2013 has been extracted from the 2013 Annual Report
and Accounts and, is prepared on the same basis as set out in the 2013 Annual
Report and Accounts. The 2013 Annual Report and Accounts have been audited by
Deloitte LLP who has issued an unqualified audit report, containing no
statements under 498(2) or 5498(3) of the Companies Act 2006.
The Accounts (Financial Statements) for 2013 are expected to be filed with the
Company's Registrar following the Company's Annual General Meeting to be held
on June 2014.InternetQ : 2013 Audited Results
April 08, 2014 at 02:01 am EDT
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